Alaska to share in well costs

Posted: April 12, 2013 - 12:07am

JUNEAU — Alaska’s share of revenue from oil and gas development in the National Petroleum Reserve-Alaska would be used to clean up abandoned federal well sites in the Alaska arctic under the budget proposed by President Barack Obama.

The proposal drew a swift, strong reaction from state officials who have been pressing the federal government to address the so-called legacy wells in the reserve.

“The idea that this administration would rob the state to clean up this mess is unbelievable,” U.S. Sen. Lisa Murkowski said in a statement. “These are federal wells that were drilled on federal lands and every day since then have remained a federal obligation. At no point should our state’s revenues be swiped to pay for them.”

Murkowski’s office, which has been pushing for progress from BLM on the cleanup, noticed the budget item.

More than 130 wells were drilled under the federal government’s direction as part of an exploratory oil and gas program from the 1940s to the 1980s. Wells are currently managed by the Bureau of Land Management.

BLM-Alaska has said it has secured about $86 million to plug 18 legacy wells since 2002 and is working with the Alaska Oil and Gas Conservation Commission and others to prioritize the remaining cleanup. Addressing one well alone can cost millions of dollars.

There has been a difference in opinion over which wells are truly problems and which are properly plugged.

A statement from BLM said the agency itself has about $1 million in base funding for legacy wells in Alaska.

Obama’s budget plan proposes to “temporarily” halt revenue sharing payments to the state from oil and gas development in the reserve and divert it to a new fund.

That fund would supplement current funding for BLM and address priority BLM projects. That includes the cleanup of legacy well sites and completion of land conveyances that Murkowski said were owed to the state and Alaska Natives since as far back as statehood. Under the budget proposal, the regular revenue sharing agreement would resume once work on both those items was complete.

The state Revenue Department has forecast that Alaska is expected to receive about $4.9 million in royalties, rents and bonuses from the reserve this fiscal year and $3.9 million next year.

The Alaska Legislature has taken to calling the wells “travesty wells,” and has twice passed resolutions calling on BLM to properly plug the wells and reclaim the well sites.

State Rep. Charisse Millett, who was the lead sponsor on the resolutions, said in a statement that the “polluted wells are clearly a federal responsibility and there is no wiggle room there.

“This is a perfect example of the arrogance and hypocrisy the federal government and this administration have shown towards our state,” she said.

Cathy Foerster, a commissioner with the Alaska Oil and Gas Conservation Commission, said she was “disappointed, insulted, and angry.”

“Now on top of that, they’re telling us that if they do something wrong in our state, then we are responsible for fixing it,” she said in an email to The Associated Press.